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News Analysis

Trump Has Options to Punish Musk Even if His Federal Contracts Continue

 

The president could tighten federal oversight of the tech titan’s businesses, even if heavy reliance by the Pentagon and NASA on them makes terminating Mr. Musk’s contracts less feasible.

 

Eric Lipton Kenneth Chang

By Eric Lipton and Kenneth Chang

Eric Lipton reported from Washington, and Kenneth Chang from New York.

Published June 6, 2025

Updated June 7, 2025, 12:16 a.m. ET

https://www.nytimes.com/2025/06/06/us/politics/trump-musk-spacex-contracts.html

 

After the relationship between President Trump and Elon Musk exploded into warfare Thursday, Mr. Trump suggested that he might eliminate the tech titan’s federal contracts.

 

“The easiest way to save money in our Budget, Billions and Billions of Dollars, is to terminate Elon’s Governmental Subsidies and Contracts. I was always surprised that Biden didn’t do it,” Mr. Trump posted on his social media platform.

 

That’s not as easy as Mr. Trump implies. The Pentagon and NASA remain intensely reliant on SpaceX, Mr. Musk’s rocket launch and space-based communications company, to get to orbit and move government data across the world.

 

But there are options available to the president that could make Mr. Musk’s relationship with the federal government much more difficult than it has been so far in Mr. Trump’s second administration.

 

Mr. Trump’s most accessible weapon to punish Mr. Musk is the ability to instruct federal regulators to intensify oversight of his business operations, reversing a slowdown in regulatory actions that benefited Mr. Musk’s businesses after Mr. Trump was elected.

 

“In an administration that has defined itself by reducing regulation and oversight, it would not be difficult to selectively ramp up oversight again,” said Steven L. Schooner, a former White House contracts lawyer who is now a professor at George Washington University.

 

With a decree, Mr. Trump could suspend Mr. Musk’s security clearance, a step that the Trump administration has also taken against some of its Biden-era critics. That move would make it harder for Mr. Musk to continue in his role as the chief executive at SpaceX, given its billions of dollars in Pentagon contracts.

 

Pentagon investigators had already been examining if Mr. Musk has violated federal security clearance requirements for disclosing contacts with foreign government leaders, The New York Times reported last year.

 

The Trump administration could also slow down new contracts going to SpaceX in the years to come, perhaps by looking for ways to drive more work to its rivals, such as Jeff Bezos’ Blue Origin or the Boeing and Lockheed partnership called United Launch Alliance.

 

But billions of dollars in financial commitments have already been made to SpaceX for launches that will be spread out over the rest of Mr. Trump’s term to deliver astronauts and cargo to the International Space Station and even the moon, as well as to send military and spy satellites into orbit.

 

Moreover, the services SpaceX provides are vital to some of Mr. Trump’s top agenda items, such as building a new space-based missile defense program that the Pentagon is calling Golden Dome. That program will require dozens of launches to orbit as well as space-based observation and data transmission systems to track and help intercept missile threats.

 

SpaceX is by far the dominant global player in these launches. While Blue Origin and other companies like Rocket Lab and Relativity Space are building or have recently built their own new rockets, none of them have the kind of launch record and reliability that SpaceX’s Falcon 9 rocket has.

 

Overall, the federal government has awarded nearly $18 billion in contracts to SpaceX over the past decade, including $3.8 billion just in the 2024 fiscal year, according to a tally by The New York Times. That makes SpaceX one of the largest federal contractors, with most of that money coming from NASA and the Pentagon.

 

Terminating SpaceX’s contracts “would end the U.S. capability to launch astronauts to orbit for the foreseeable future,” said Laura Seward Forczyk, founder of the space consulting firm Astralytical. It would also significantly delay the U.S. effort to return humans to the moon, she said.

 

Bethany Stevens, NASA’s press secretary, hinted on Mr. Musk’s X platform late Thursday afternoon — as the verbal war between Mr. Musk and Mr. Trump continued to play out — that the deals with SpaceX are in fact not going to be canceled anytime soon.

 

“NASA will continue to execute upon the President’s vision for the future of space,” Ms. Stevens said, without mentioning Mr. Musk or SpaceX by name. “We will continue to work with our industry partners to ensure the President’s objectives in space are met.”

 

But Mr. Trump has more flexibility when it comes to the alphabet soup of federal agencies that regulate SpaceX as well as Tesla, Mr. Musk’s car company; X, the social media platform; the Boring Company, his underground drilling outfit; and Neuralink, his computer chip brain implant startup.

 

The federal government, by most historical and ethical norms, is not supposed to be used as a retaliatory machine to punish political enemies. And that practice by Mr. Trump would be abnormal and inappropriate, Mr. Schooner said.

 

But the Trump administration, including the Justice Department, has already shown itself willing to take up investigations that target Mr. Trump’s enemies or organizations that he dislikes, like Harvard University or even his former aides who have become critics, like Chris Krebs, his former top cybersecurity official.

 

Before Mr. Trump was elected, at least 11 federal agencies had ongoing investigations or lawsuits targeting Mr. Musk’s companies. These included the Federal Aviation Administration’s scrutiny of launch safety issues, the Environmental Protection Agency inquiry’s into potential water pollution at SpaceX’s Texas launch site and transportation regulators’ questions about fatal accidents involving Tesla cars using autopilot.

 

Several of those inquiries were put on hold. In other instances, fines that Mr. Musk’s companies had been assessed were being reconsidered, including one that the F.A.A. announced last September for what it said were safety violations during launches in Florida. Mr. Trump’s top transportation official vowed at his confirmation hearing to “review” that fine. As of last week, it had still not been paid, an agency official said.

 

The Fish and Wildlife Service also has slowed down its oversight of SpaceX’s Texas launch site, where the company for years has been accused of damaging adjacent state park and National Wildlife Refuge lands. That enforcement effort could be turned back on almost overnight, if Mr. Trump ordered it.

 

But no other American company can currently do what NASA needs.

 

Boeing, the other company NASA hired to take astronauts to orbit, has yet to complete fixes for its Starliner capsule after a test mission left two NASA astronauts, Suni Williams and Butch Wilmore, in orbit for nine months before they finally returned to Earth in a SpaceX Crew Dragon.

 

The aerospace company Northrop Grumman also has a contract to take cargo to the space station with its Cygnus spacecraft, but the most recent Cygnus had to be scrapped after it was damaged during shipment to Florida for launch.

 

NASA has hired a third company, Sierra Space of Louisville, Colo., for cargo deliveries. But the company’s Dream Chaser space plane has yet to make its first flight.

 

SpaceX has also won contracts to launch many of NASA’s most important science missions like Dragonfly, a nuclear-powered drone that is to fly around Saturn’s moon Titan.

 

Further complicating any attempt to kill Mr. Musk’s contracts is that agencies would likely still have to pay termination fees for the work, a cost that could rival that of simply buying the promised goods, Mr. Schooner said.

 

“It would be a bad idea,” he said.

 

Elon Musk appears to recognize this leverage he has over NASA.

 

He initially threatened on Thursday, as the war of words with Mr. Trump played out, to stop future flights to deliver astronauts to the space station, but he appeared to walk back that threat later in the day.

 

Eric Lipton is a Times investigative reporter, who digs into a broad range of topics from Pentagon spending to toxic chemicals.

 

Kenneth Chang, a science reporter at The Times, covers NASA and the solar system, and research closer to Earth.